Explain what is meant by the 'fundamental economic problem'
Limited resources, unlimited wants and needs
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Explain what 'scarcity' is
Limited, finite
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Explain what opportunity cost is and how decisions have an opportunity cost
Opportunity cost is the value of the next best option forgone. Decisions have an opportunity cost because resources are scarce - you cannot do all possible decisions at the same time.
3 of 9
State the central purpose of economic activity
The production of goods and services to satisfy needs and wants
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Explain what the key economic decisions are that have to be made by economic decision/policy makers
What to produce, how to produce it, who gets how much of what
5 of 9
Explain what a 'social science' is
Any science with an emphasis on the study of human behaviour and society
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Compare economics as a discipline to the natural sciences
Economics is a social science - study of how humans interact with things of value. Cannot do experiments like with the natural sciences - variables in the real world cannot easily be isolated
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Explain the difference between positive and normative statements
Normative statement - a statement about how the world should be, an opinion
Positive statement - a statement about how the world is, true or false
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Explain how value judgements and moral and political judgements (normative statements) influence decision making
Value judgements influence what the end goal should be, and what we think the best way to get there is.
9 of 9
Other cards in this set
Card 2
Front
Explain what 'scarcity' is
Back
Limited, finite
Card 3
Front
Explain what opportunity cost is and how decisions have an opportunity cost
Back
Card 4
Front
State the central purpose of economic activity
Back
Card 5
Front
Explain what the key economic decisions are that have to be made by economic decision/policy makers
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